CADE does not act alone in defense of competition in Brazil. The Economic Law Office (SDE) of the Ministry of Justice and the Economic Monitoring Secretariat [Secretaria Especial de Acompanhamento Econômico - SEAE] of the Ministry of Finance are government agencies assigned gather evidence in these cases. These three agencies (CADE, SDE and SEAE) comprise the Brazilian System for Protection of Competition (SBDC).

There are certain obstacles that must be overcome if the SBDC and, therefore, CADE, are to do their jobs. These obstacles are:

1. Lack of coordination between CADE and government policies on industry, foreign trade, and privatization. CADE, as a government body, must be in synch with other administration policies and must avoid being isolated.

2. As regards industrial policy, CADE must keep in mind [not fail to consider] that the restructuring of some industry sectors demands a reduction in installed capacity and an increase in the degree of concentration. The intense increase in the number of mergers and acquisitions taking place in Latin America and Brazil, in which this country has a growing relative share, is worth noting. The following chart shows that Brazil accounted for 28 percent of such transactions in 1995, up from 9 percent in 1994. In this context, the SBDC has been increasingly called upon, as demonstrated by the trend in the number of acts of concentration analyzed by the SEAE/MF since 1991, and by CADE between 1994 and 1996, as seen in the following charts:

3. With respect to foreign trade policy, it is important to emphasize that the number of tariff and non-tariff barriers is crucial to a determination of the degree to which imports can compete on the Brazilian market and therefore, to an assessment of the potential damage from an act of concentration or anti-competitive practices. Achievement of reductions in these barriers, ver which CADE has no authority, can be vital to avoid problems [of excessive market concentration].

4. It is important to point out that it is in the sectors of infrastructure and strategic inputs that competition-related problems can be the most damaging. In this regard, it is vital that CADE become a more active participant in the privatization of companies in those sectors, and also in the regulation of the infrastructure sectors to be done in cooperation with the specific regulatory agencies that are being created, which would take place along lines similar to those of the British model.

A. Harmonization of Competition Policies in Mercosur, FTAA and the European Community

The creation and consolidation of regional trade blocs has frequently involved a harmonization of policies adopted in defense of competition. The implantation of common markets entails, at least, a shared vision of the applications of competition-protecting measures. Brazil will face these problems not only at the Mercosur level, but also when and if it joins other blocs.

Furthermore, the ongoing process of globalization of the international economy has, increasingly, generated economic transactions that involve multiple countries, simultaneously. This has particularly been the case with mergers, acquisitions, and joint ventures. Emblematic of this was the recent purchase of Kolynos by Colgate, which involved acquisition of a portfolio of brands registered in 134 countries. CADE ruled on this case in 1996.

For the time being, no international agreement has focused on harmonizing or developing principles related to the defense of competition. At any rate, it is becoming necessary to replace anti-dumping provisions with harmonized competition laws.

B. Memorandum of Understanding between Brazil and Argentina on the Defense of Competition

Under the Argentina-Brazil Economic Integration and Cooperation Program, the governments of the two countries formalize their intent to establish a Program of Cooperation in Defense of Competition, in order to join national forces for their common benefit and to contribute to the effectiveness of competition policy within the context of Mercosur.

The type of cooperation that is the subject of this Memorandum will be coordinated, proposed, decided, and effected by CADE, for Brazil, and by the Argentine National Commission on the Defense of Competition.

In order to enjoy the benefits stemming from this Cooperation Program, the parties agree to:

1. Promote an exchange of information and experiences in the field of defense of competition.

2. Include the following in this Program:
(a) Exchanges of specific legislation, case law, and documentation;
(b) Human resources training programs;
(c) Exchange of information on topics related to competition policy;
(d) Creation of reciprocal cooperation mechanisms, including the seminars, courses, and exchanges of technical personnel;
(e) Bilateral meetings for discussion and decisions on topics related to the implementation of this Program.